Derivatives analyst Nandish Shah recommends Bull Spread on Bharat Forge

Bull Spread Strategy on Bharat Forge

Buy (29-Sept Expiry) 790 CALL at Rs 15.65 & simultaneously sell 810

CALL at Rs 9

Lot Size 1000

Cost of the strategy Rs 6.65 (Rs 6,650 per strategy)

Maximum profit Rs 13,350, if closes at or above Rs 810 on 29-Sept expiry.

Breakeven Point Rs 796.65

Approx margin required Rs 34,000

Rationale:

  • We have seen long build up in the futures, where we have seen 16% addition (Prov) in Open Interest with price rising by 3%.
  • Stock price is forming higher top higher bottom formation on the daily chart.
  • Primary trend of the stock is positive as it is trading above its 50, 100 and 200 day EMA.
  • Momentum Oscillators like RSI (11) and MFI (10) is in rising mode and placed above 60 on the daily chart, Indicating strength in the current uptrend.

Disclaimer: Nandish Shah is Technical Research Analyst at HDFC Securities. He doesn’t hold any position in the stock. Views are personal.

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